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TMI BlogADMISSION OF APPLICATION ON INSOLVENCY RESOLUTION PROCESS OF PERSONAL GURANTORS OF CORPORATE DEBTORX X X X Extracts X X X X X X X X Extracts X X X X ..... ADMISSION OF APPLICATION ON INSOLVENCY RESOLUTION PROCESS OF PERSONAL GURANTORS OF CORPORATE DEBTOR - By: - Mr. M. GOVINDARAJAN - Corporate Laws / IBC / SEBI - Dated:- 28-2-2024 - In State Bank of India v. Pankaj Naraibhai Patel - 2024 (2) TMI 1215 - NATIONAL COMPANY LAW TRIBUNAL , the present application is filed under Section 95(1) of the Insolvency and Bankruptcy Code. 2016 ( Code for short) read with Rule 7(2) of the Insolvency and Bankruptcy (Application to Adjudicating Authority for Insolvency Resolution Process for Personal Guarantors to Corporate Debtors) Rules, 2019 by State Bank of India, the Financial Creditor for the purpose of initiating insolvency process against Pankaj Narayanbhai Patel, the personal guarantor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for a default of Rs. 37,15,26,865.29. The Respondent/Personal Guarantor stood as Guarantor in respect for repayment of interest, cost, charges and other expenses in respect of Deed of Guarantee dated 15.03.2016 in favor of applicant. The financial creditor initiated corporate insolvency resolution process ( CIRP for short) against the corporate debtor Swastik Ceracon Limited and the same was admitted by the Adjudicating Authority on 15.01.2019. The Financial Creditor invoked the personal guarantee and issued demand notice to the Respondent on 22.09.202. Since no payment has been received the financial creditor filed an application before the Adjudicating Authority for initiation of insolvency resolution process of the personal guarantor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the corporate debtor under Section 95(1) of the Code. The said application was admitted on 01.12.2021 and appointed an Interim Resolution Professional ( IRP for short). The Adjudicating Authority directed the IRP to submit its report as to the admission/rejection of the application within 10 days from the receipt of the order. The IRP filed his report on 14.12.2021 recommending the admission of the application. The copy of the report has been sent to the personal guarantor. The personal guarantor raised the following objections against the findings- The petition was filed beyond the period of 3 years hence it is barred by law of limitation as the Guarantee was invoked on 17.10.2018 whereas the instant petition was filed in N ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ovember, 2021. The IRP has not verified the records and undertaking due diligence stated facts in the report hence the reports is required to be rejected. The State Bank of India had already filed its claim for the dues before the Resolution Professional in the CIRP of the Swastik Ceracon Private Limited. CIRP is still pending before this Tribunal. For the objections raised by the personal guarantor, the financial creditor submitted the following before the Adjudicating Authority- The default occurred on 16.12.2018 in the account of the corporate debtor company i.e. Swastik Ceracon Limited. The application is filed on 17.11.2021 i.e., prior to completion of 3 years and therefore the application is under the limitation pe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... riod. The Adjudicating Authority heard the submissions of the parties. The Adjudicating Authority observed that under section 128 of Indian Contract Act, 1872 that when a default is committed the Principal Borrower and Surety are jointly and severally liable to Creditor and Creditor has the right to recover its dues from either of them or from both of them simultaneously. The Adjudicating Authority observed the following- IRP has recommended accepting the application for the reason as stated in the report dated 11.12.2021. The Respondent has admitted to have executed the Guarantee Agreement. The Applicant has demanded the amount outstanding from the Respondent vide Demand Notice dated 22.09.2021. No evidence was plac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed before him by the Respondent having paid the amount demanded by the Applicant. The Adjudicating Authority also observed that the application has not been hit by limitation. The Adjudicating Authority ordered as below- No evidence was placed before him by the Respondent having paid the amount demanded by the Applicant. The moratorium shall cease to have effect at the end of the period of 180 days, or this Tribunal passes order on the repayment plan under Section 114 whichever is earlier as provided. The Adjudicating Authority further ordered that during the moratorium period- Any pending legal action or proceeding in respect of any debt shall be deemed to have been stayed. The creditors of the debtor shall ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not initiate any legal action or proceedings in respect of any debt. The debtor shall not transfer, alienate, encumber, or dispose of any of his assets or his legal rights or beneficial interest therein. The IRP is directed to cause a public notice published on behalf of the Adjudicating Authority within 7 days of passing this Order. The public announcement shall include- details of the order admitting the application; particulars of the resolution professional with whom the claims are to be registered; and the last date for submission of claims. The publication of notice shall be made in two newspapers, one in English and other in Vernacular which have wide circulation in the State where the Corporate Debto ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r and Personal Guarantor resides. The Resolution Professional shall furnish two spare copies of the notice to the Registry for the record. The Resolution Professional in the exercise of the powers conferred under Section 104 shall prepare a list of creditors on the basis of- the information disclosed in the application filed by the debtor under Sections 94 or 95 as the case may be, and claims received by the Resolution Professional within 30 days from the date of the notice. The debtor/personal guarantor shall prepare a repayment plan under Section 105 , in consultation with the Resolution Professional, containing a proposal to the Creditors for restructuring of his debts or affairs. The repayment plan may ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... authorize or require the Resolution Professional to- carry on the debtor's business or trade on his behalf or in his name; or realize the assets of the debtor; or administer or dispose of any funds of the debtor. The repayment plan shall include the following- justification for preparation of such repayment plan and reasons based on which the creditors may agree upon the plan; provision for payment of fee to the Resolution Professional; such other matters as may be specified. The Resolution Professional shall submit the repayment plan along with his report on the plan to this Authority within a period of 21 days from the last date of submission of claims. If Committee of Creditors is con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stituted the meeting of the creditors shall be conducted in accordance with Sections 108 , 109 , 110 111 of the code. The Resolution Professional shall submit his periodic reports before this Tribunal, every 30 days. The Adjudicating Authority, thus, held that the application is admitted and the initiation of insolvency process stand initiated against the Personal Guarantor. - Scholarly articles for knowledge sharing authors experts professionals Tax Management India - taxmanagementindia - taxmanagement - taxmanagementindia.com - TMI - TaxTMI - TMITax ..... X X X X Extracts X X X X X X X X Extracts X X X X
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